Hospital Corporation of America

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Hospital Corporation of America
Public
Traded asNYSEHCA
S&P 500 Component
IndustryHealth care
Founded1968; 50 years ago (1968)
Nashville, Tennessee, U.S.
Headquarters,
Number of locations
178 Hospitals, 119 Surgery Centers,[1] 121 Access Centers
Area served
United States and United Kingdom
Key people
R. Milton Johnson (CEO)
Michael Neeb (CEO, HCA UK)
RevenueIncreaseUS$41.490 billion (2016)
IncreaseUS$2.890 billion (2016)
Number of employees
204,000
Websitehcahealthcare.com

Hospital Corporation of America (HCA) is an American for-profit operator of health care facilities that was founded in 1968. It is based in Nashville, Tennessee and in 2014 it managed 178 hospitals and approximately 1,800 sites of care, including surgery centers, freestanding ERs, urgent care centers, and physician clinics in the United States and United Kingdom.[2] HCA went public on the New York Stock Exchange (NYSE) in 1969 followed by a substantial growth period for the next two decades. The company was ranked No. 63 in the 2018 Fortune 500 list of the largest United States corporations by total revenue.[3]

In 1993, lawsuits were filed against HCA by former employees who drew attention to the company's questionable billing practices to Medicare for hundreds of millions of dollars.[4] Some of the allegations included charging the government costs for running its hospitals, paying kickbacks to physicians for referrals, and unlawfully charging for costs involving wound care facilities. A federal probe ensued, spanning nearly a decade, and culminated in 2003 with "the government receiving a total of over $2 billion in criminal fines and civil penalties for systematically defrauding federal health care programs."[5] The federal probe has been referred to as the longest and costliest investigation for health-care fraud in U.S. history.[6]

History[edit]

Early years[edit]

HCA founders (left to right) Dr. Thomas Frist Sr., Jack Massey, Dr. Thomas Frist Jr.

HCA was founded in 1968, in Nashville, Tennessee by Dr. Thomas F. Frist Sr., Dr. Thomas F. Frist Jr. and Jack C. Massey.[7] The first hospital that HCA owned was Park View Hospital, near downtown Nashville.[8] The small group of founders worked out of a small house not far from Park View for the first few years of operation.[9]

In 1969, HCA conducted its initial public offering (IPO) on the New York Stock Exchange (NYSE).[8] As HCA grew, the small house that served as office space was no longer large enough, and in 1972, they built new offices behind Nashville's Centennial Park.[10]

Parkview Hospital circa 1968

Growth and merger[edit]

During the 1970s and 1980s the corporation went through a tremendous growth period acquiring hundreds of hospitals across the US, 255 owned by HCA, and another 208 managed by HCA.

In 1988, the hospital operator was acquired for $5.1 billion in a management buyout led by chairman Thomas F. Frist, Jr.[11] and completed a successful initial public offering in 1992. In 1993 HCA merged with Louisville-based Columbia Hospital Corporation to form Columbia/HCA. In April 1998, Birmingham, Alabama-based HealthSouth Corporation announced it was acquiring the majority of HCA's surgical division.

HCA's first office in Nashville, Tennessee

Recent history[edit]

In 2006, Kohlberg Kravis Roberts and Bain Capital, together with Merrill Lynch and the Frist family (which had founded the company) completed a $33.6 billion acquisition, making the company privately held again, 17 years after it had first been taken private in a management buyout. At the time of its announcement, the HCA buyout was the first of several to set new records for the largest, eclipsing the 1989 buyout of RJR Nabisco. It would later be surpassed by the buyouts of Equity Office Properties and TXU.[12]

In May 2010, HCA announced that the corporation would once again go public with an expected $4.6-billion IPO. In March 2011, HCA sold 126.2 million shares for $30 each, raising about $3.79 billion, at that time, the largest private-equity backed IPO in U.S. history.[13]

In 2017, it acquired three hospitals from Tenet Healthcare.[14] Milton Johnson is the current CEO of HCA, with an announced retirement at the end of 2018.[15] He will be replaced by Sam Hazen.[16]

Facilities[edit]

As of 2018, HCA operated 178 hospitals and approximately 1,800 sites of care, including surgery centers, freestanding ERs, urgent care centers, and physician clinics located in 20 U.S. states and in the United Kingdom.[2] In July 2007, HCA sold its hospitals in Switzerland.[17]

United Kingdom[edit]

The main hospital sites within the United Kingdom include:

It opened urgent care walk-in centres at London Bridge Hospital and the Portland Hospital in March 2018. They claim that patients, on average, wait just seven minutes to see a nurse and 17 minutes to see a doctor.[18]

The Princess Grace Hospital specializes in breast cancer and surgery, aided by Professor Kefah Mokbel and Dr. Nick Perry who, in 2005, founded The London Breast Institute.

Fraud investigations[edit]

In 1993, lawsuits were filed by former employees regarding alleged improprieties in HCA's billing of Medicare which amounted to hundreds of millions of dollars. With federal investigations still underway, HCA was acquired by Columbia Healthcare; their growth and expansion continued under the company's founder Rick Scott. In 1997, amid growing evidence that HCA "had kept two sets of books, one to show the government and one with actual expenses listed" [4] Scott resigned, and became a venture capitalist. Thomas Frist, a co-founder of HCA and brother of US Senator Bill Frist, took Scott's place.[4]

In March 1997, investigators from the FBI, the Internal Revenue Service and the Department of Health and Human Services served search warrants at Columbia/HCA facilities in El Paso and on dozens of doctors with suspected ties to the company.[19] Following the raids, the Columbia/HCA board of directors forced Rick Scott to resign as chairman and CEO.[20] He was paid a settlement of $9.88 million and left with 10 million shares of stock worth over $350 million, mostly from his initial investment.[21][22] In 1999, Columbia/HCA changed its name back to HCA, Inc. HCA also admitted fraudulently billing Medicare and other health programs by inflating the seriousness of diagnoses and to giving doctors partnerships in company hospitals as a kickback for the doctors referring patients to HCA. They filed false cost reports, fraudulently billing Medicare for home health care workers, and paid kickbacks in the sale of home health agencies and to doctors to refer patients. In addition, they gave doctors "loans" that were never intended to be repaid as well as free rent, free office furniture, and free drugs from hospital pharmacies.[23][24]

After Scott stepped down, Frist Jr. returned as chairman and CEO. He called on longtime friend and colleague Jack O. Bovender, Jr., to help him turn the company around. Frist and Bovender, who became CEO in 2001, pulled off what Fortune magazine called a remarkable corporate rescue.[6] In settlements reached in 2000 and 2002, Columbia/HCA pleaded guilty to 14 felonies and admitted systematically overcharging the government by claiming marketing costs as reimbursable, striking illegal deals with home care agencies, and filing false data about use of hospital space.

Corporate office in 1972

In late 2002, HCA agreed to pay the U.S. government $631 million, plus interest, and pay $17.5 million to state Medicaid agencies, in addition to $250 million paid up to that point to resolve outstanding Medicare expense claims.[4] In all, civil lawsuits cost HCA more than $2 billion to settle.[5] The name subsequently reverted to "Hospital Corporation of America." HCA abandoned the use of its name in its home market and instead promotes its Nashville hospitals under the TriStar brand. The federal investigations, which spanned nearly a decade, drew to a close in 2003 with "the government receiving a total of over $2 billion in criminal fines and civil penalties for systematically defrauding federal health care programs."[5] The case has been referred to as the longest and costliest investigation for health-care fraud in U.S. history.[6]

In July 2005, U.S. Senator Bill Frist sold all of his HCA shares two weeks before disappointing earnings sent the stock on a 9-point plunge. Frist claimed that he sold his shares to avoid the appearance of a conflict of interest if he ran for president. Other executives sold their stock at the same time. Shareholders sued HCA and alleged that the company made false claims about its profits to drive up the price, which then fell when the company reported disappointing financial results. Eleven of HCA's senior officers were sued for accounting fraud and insider trading.[25] HCA settled the lawsuit in August 2007, agreeing to pay $20 million to the shareholders.[26]

Nashville furniture controversy[edit]

The Metropolitan Council of Nashville and Davidson County gave $1 million to HCA for "moving expenses" into their new building in North Gulch in 2014.[27] By 2018, HCA had spent the amount on office furniture, leading to concerns on the part of council member Erica Gilmore, who blamed it on Nashville's Metropolitan Development and Housing Agency, and the Beacon Center of Tennessee.[27]

See also[edit]

References[edit]

  1. ^ "Our History". HCA Healthcare. Retrieved January 29, 2018.
  2. ^ a b HCA Fact Sheet 2014 Archived September 5, 2015, at the Wayback Machine.
  3. ^ "Fortune 500 Companies 2018: Who Made the List". Fortune. Retrieved 2018-11-10.
  4. ^ a b c d Appleby, Julie (December 18, 2002). "HCA to settle more allegations for $631M". USA Today.
  5. ^ a b c "The Accomplishments of the U.S. Department of Justice : 2001-2009" (PDF). Justice.gov. Retrieved 2 October 2017.
  6. ^ a b c "Bringing HCA Back to Life After years of scandal, the hospital chain is healthy again--and might just be a buy". Fortune Magazine.
  7. ^ "Our History". HCA Healthcare. Retrieved 2018-06-22.
  8. ^ a b Dr. Thomas Frist Sr., HCA Founder, Dies at 87, New York Times, January 8, 1998
  9. ^ "HCA Healthcare". Facebook.com. Retrieved October 2, 2017.
  10. ^ "HCA Healthcare". Facebook.com. Retrieved October 2, 2017.
  11. ^ Freudenheim, Milt. Buyout Set For Chain Of Hospitals. The New York Times, November 22, 1988.
  12. ^ SORKIN, ANDREW ROSS. "HCA Buyout Highlights Era of Going Private." New York Times, July 25, 2006.
  13. ^ "HCA IPO prices at $30, sells more shares: sources". Reuters. Retrieved 2015-02-02.
  14. ^ HCA Healthcare
  15. ^ Tennessean
  16. ^ Bizjournals.com
  17. ^ HCA sells Switzerland hospitals Nashville Business Journal, June 20, 2007.
  18. ^ "HCA expands network of urgent care centres". LaingBuisson. 12 March 2018. Retrieved 11 May 2018.
  19. ^ "U.S. Expands Search of Columbia/HCA in Texas". The New York Times.
  20. ^ 2 Leaders Are Out at Health Giant as Inquiry Goes on. New York Times, July 1997
  21. ^ Korten, Tristram (2009-09-30). "Rick Scott profits off the uninsured". Salon.com. Retrieved 2013-08-15.
  22. ^ "Hospital Firm Ousts Its Founder; Columbia/Hca Tries To Stop Slide. - Free Online Library". Thefreelibrary.com. 1997-07-26. Retrieved 2013-08-15.
  23. ^ "Disaster Of The Day: HCA". Forbes.com. December 15, 2000.
  24. ^ "The risk of choosing Scott". HeraldTribune.com. Retrieved 2013-08-15.
  25. ^ "In re HCA Inc., Securities Litigation". Retrieved Jul 26, 2013.
  26. ^ [1][dead link]
  27. ^ a b Hall, Ben (May 22, 2018). "Metro Buys HCA $1 Million In Office Furniture". WTVF. Retrieved May 23, 2018.

Further reading[edit]

External links[edit]